MILLIONS of Americans who benefitted from expanded child tax credits last year are dealing with a big change in 2022 when it comes to the amount they get.
Taxpaying parents will see the credit revert back to $2,000 per child this year, in line with the program offered by the IRS before the 2021 expansion.
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That means this tax year the money will be distributed in the form of a single end-of-year tax credit, per the previous program from the IRS.
This will either reduce the size of the recipient’s tax bill, or increase their tax refund.
Children must be aged 16 or younger to be eligible for the support, and the modified gross income (AGI) cannot exceed $400,000 on a joint return and $200,000 on a single or head-of-household return.
Above those incomes, a $50 decrease would ensue for every $1,000 in additional income.
How does this compare to 2021?
In 2021 only, the child tax credit was temporarily boosted to a maximum of $3,600 per child under Biden’s plan.
Enhanced funds were distributed on a monthly basis to help ensure struggling families a more constant stream of guaranteed income.
From July to December of 2021, eligible families received up to $300 per child under six years old and $250 for children between the ages of six to 17.
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To be eligible for the maximum credit taxpayers had to have an AGI of:
- $75,000 or less for singles,
- $112,500 or less for heads of household and
- $150,000 or less for married couples filing a joint return and qualified widows and widowers.
The purpose of the American Rescue Plan, which was signed into law by Biden in March 2021, was to help families get by amid rising costs and to help bring the US economy back to health after Covid.
Democrats are pushing to extend the credit, but many Republicans oppose the idea.
President Biden has previously called to extend the child tax credit payments until at least 2025.
Research from the Center on Budget and Policy Priorities has found that the American Rescue Plan helped reduce child poverty by more than 40%.
Here is more on child tax credits potentially getting extended beyond this year.
We also explain what parents who share joint custody of kids need to know about child tax credit payments.
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